United States Institute of Peace

The Iran Primer

US Report: Sanctions Biting Harder

            The Congressional Research Service periodically releases a comprehensive report on Iran sanctions impact. The following are excerpts from the latest update with a link to the full text at the end.
 
Summary
 
            Increasingly strict sanctions on Iran—sanctions that primarily target Iran’s key energy sector and its access the international financial system—have harmed Iran’s economy to the point where Iran’s public and some of its leaders appear willing to accept some international proposals to limit Iran’s nuclear program to purely peaceful purposes. The June 14, 2013, election as president of Hassan Rouhani, who ran on a platform that included achieving an easing of sanctions, is an indication of the growing public pressure on the regime.
 
•Oil exports fund nearly half of Iran’s government expenditures, and Iran’s oil exports have declined to about 1.1 million barrels—less than half of the 2.5
million barrels per day Iran exported during 2011. The causes of the drop have been a European Union embargo on purchases of Iranian crude oil and decisions
by other Iranian oil customers to obtain exemptions from U.S. sanctions by reducing purchases of Iranian oil. Twenty countries that buy Iranian oil have exemptions.
 
•The loss of revenues from oil, coupled with the cut-off of Iran from the international banking system, has caused a sharp drop in the value of Iran’s currency, the rial; raised inflation to over 50%, reduced Iran’s reserves of foreign exchange; and caused much of Iran’s oil revenues to go unused in third-country accounts. Iran’s economy shrank slightly from 2012 to 2013 and will likely do so again during 2013. There have also been unintended consequences, including a shortage of some advanced medicines.
 
•Iran has tried, with mixed success, to mitigate the effects of sanctions. Government-linked entities are creating front companies, and Iranian importers and exporters are increasingly using barter trade and informal banking exchange mechanisms. Iran is also increasing non-oil exports or exports of hydrocarbon products other than crude oil, such as gas condensates. Affluent Iranians have invested in—and driven up prices for—real estate and securities listed on the Tehran stock exchange.
 
            Sanctions might also be slowing Iran’s nuclear and missile programs by hampering Iran’s ability to obtain needed foreign technology. But U.S. assessments indicate that sanctions have not stopped Iran from developing new conventional weaponry indigenously. Based largely on its provision of arms to the embattled Assad government in Syria, Iran is also judged as not complying with U.N. requirements that it halt any weapons shipments outside its borders. And sanctions do not appear to have altered Iran’s repression of dissent or monitoring of the Internet.
            Some in Congress believe that economic pressure on Iran needs to increase. In the 112th Congress, the Iran Threat Reduction and Syria Human Rights Act of 2012 (P.L.112-158) made sanctionable the shipping of Iranian crude oil, and it enhanced human rights-related provisions of previous Iran-related laws. A provision of the FY2013 National Defense Authorization Act (P.L. 112-239) sanctions transactions with several key sectors of Iran’s economy. A bill in the 113th Congress, H.R. 850, passed by the House on July 31, 2013, would, among other provisions, accelerate the oil purchase reductions required to maintain a sanctions exemption. However, some argue that new sanctions should not be imposed until Rouhani’s diplomatic overtures on the nuclear issue are tested and that there be consideration of easing sanctions if a nuclear deal is reached.
 
Effect on Iran’s Nuclear Program Decisions and Capabilities
            By all accounts—the United States, the P5+1, the United Nations, the International Atomic Energy Agency (IAEA)—Iran has not complied with the applicable provisions of the U.N. Security Council resolutions requiring that outcome. Five rounds of P5+1—Iran talks during 2012 and thus far in 2013, the latest of which took place in Almaty, Kazakhstan during April 5-6, 2013, produced no breakthroughs.
            Some experts are adopting the view that sanctions might have compelled a change in Iran’s nuclear approach. On June 14, 2013, Iranians elected the relatively moderate mid-ranking cleric Hassan Rouhani as President; he ran on a platform of achieving an easing of sanctions, and outcome likely only in the event there is a nuclear compromise. Since his election—and particularly during his September 23-27, 2013, visit to the U.N. General Assembly meetings in New York—Rouhani has stressed that Iran seeks a nuclear settlement, possibly within six months. He accepted a phone call from President Obama on September 27, 2013, in which the two countries agreed to direct their teams to seek a settlement of that issue.
 
Counter-Proliferation Effects
            A related issue is whether the cumulative sanctions have directly set back Iran’s nuclear efforts by making it difficult for Iran to import needed materials or skills. Some U.S. officials have asserted that, coupled with mistakes and difficulties in Iran, sanctions have slowed Iran’s nuclear efforts by making it more difficult and costly for Iran to acquire key materials and equipment for its enrichment program. However, International Atomic Energy Agency (IAEA) reports have said that Iran’s capacity to enrich uranium more rapidly continues to expand, as does its stockpile of 20% enriched uranium. And, Director of National Intelligence James Clapper testified on March 12, 2013, that Iran “is expanding the scale, reach, and sophistication of its ballistic missile arsenal.”
 
 
Effects on Iran’s Regional Political and Military Influence
            Sanctions do not appear to have materially reduced Iran’s capability to finance and provide arms to militant movements in the Middle East and to Syria. Extensive Iranian support to Syrian President Bashar Al Assad appears is continuing, by all accounts. Some press reports, quoting the U.N. panel of experts, say Iran has been exporting arms to factions in Yemen and Somalia. Iran’s arms exports contravene Resolution 1747, which bans Iran’s exportation of arms.
 
General Political Effects
            Some experts assert that sanctions could accomplish their core goals if they spark dissension within the senior Iranian leadership or major public unrest. During 2011-2013, there was a split between then President Ahmadinejad and Supreme Leader Ali Khamenei, but the rift was driven primarily by institutional competition and differences over the relative weight to attach to Islam or to Iranian nationalism—not sanctions.
            Most of the candidates permitted by the regime to run for president in June 2014 were conservative allies of Khamenei, but the support of Iranians who want significant change powered the most moderate candidate in the race, Rouhani, to a first round victory. The Supreme Leader welcomed Rouhani’s election and has publicly affirmed that he backs, at least for now, Rouhani’s approach to settling the nuclear issue. However, it is possible that differences between
            Rouhani and the Supreme Leader will emerge over potential compromises with the P5+1 and possibly on other issues such as the potential easing of domestic social restrictions. At the popular level, since 2012, there has been labor and public unrest over escalating food prices and the dramatic fall of the value of Iran’s currency. However, public strikes and demonstrations have been sporadic and do not appear to threaten the regime
 
Human Rights-Related Effects
            U.S. and international sanctions have not, to date, had a measurable effect on human rights practices in Iran. Executions increased significantly in 2012, according to the State Department (human rights report for 2012, released April 19, 2013), but that is likely a result of a continued crackdown against opposition activity. Nor has the regime’s ability to monitor and censor use of the Internet and other media been evidently affected to date, even though sanctions have caused several major firms to stop selling Iran equipment that it could use to for those purposes.
 
Economic Effects
            Many experts attribute Rouhani’s attempts to settle the nuclear issue to the dramatic toll sanctions have taken on Iran’s economy. Before taking office, president Rouhani received briefings on the Iranian economy from the outgoing Ahmadinejad economic team, and said that the economy was in worse shape than that portrayed by the outgoing administration. However, analysis by some U.S. experts, and assertions by some Iranian officials, suggest that Iran may be adjusting to the sanctions and mitigating their economic effects more successfully than has been thought by experts.Indicators of the effect of sanctions and mismanagement on Iran’s economy include
 
•Oil Export Declines. Oil sales have accounted for about 80% of Iran’s hard currency earnings and about 50% of government revenues. As noted in Table 2,
sanctions have driven Iran’s oil sales down nearly 60% from the 2.5 mbd of sales in 2011. This drop is expected to reduce Iran’s revenue from crude oil to about $35 billion in 2013, down from over $100 billion in 2011.
 
• Falling Oil Production. To try to adjust to lost oil sales, Iran has been storing unsold oil on tankers in the Persian Gulf and it is building additional storage tanks on shore. Industry reports in June 2013 indicated Iran might have as much as 30 million barrels of crude oil in floating storage. The storage represents an attempt to keep up oil production because shutting down wells risks harming them and it is costly to resume production at a shut well. However, Iran’s oil production has fallen to about 2.6 - 2.8 mbd from the level of nearly 4.0 mbd at the end of 2011.
 
•Hard Currency Depletion. Not only have Iran’s oil exports fallen by volume, but it is no longer receiving easily usable and transferrable hard currency for its oil.
As of February 2013, as noted, oil customers must pay Iran in local currency—a sanction that is reportedly causing about $1.5 billion per month to pile up in foreign accounts (out of about $3.4 billion in the value of oil sales).Iran is unable to repatriate those funds, and it reportedly is having trouble identifying a sufficient amount of goods in those countries to import to make use of that balance. The IMF estimated Iran’s hard currency reserves to be about $101 billion as of the end of 2011, but estimates indicate the reserves have fallen to $60 billion to $80 billion as of October 2013.
 
•GDP Decline. Sanctions have caused Iran to suffer its first gross domestic product contraction in two decades. Many businesses are failing and there are a
large number of non-performing loans. An IMF global report issued in April 2013 said that Iran’s economy shrank 1.9% from March 2012-March 2013, and will likely shrink another 1.3% in the subsequent one year period. U.S. officials testified on May 15, 2013 that GDP 2012-2013 would drop even more—about 5% - 8%. The IMF report predicted the economy would return to growth, at about 1%, for the one year after that (March 2014-March 2015). As a consequence of the downturn, the unemployment rate has risen to about 20%, although the Iranian government reports that the rate is 13%.
 
•Currency Decline. The regime has been working to contain the effects of a currency drop, which took the value of the rial on unofficial markets from about 28,000 to one U.S. dollar to about 40,000 during September-October 2012. Prior to that, the rial’s value had fallen from 13,000 to the dollar in September 2011 to 28,000 to the dollar in mid-September 2012. The unofficial rate was about 37,000 to the dollar in May 2013, but optimism over Rouhani’s presidency caused the rial to appreciate to about 30,000 to the dollar by October 2013.
 
•Inflation. The drop in value of the currency has caused inflation to accelerate. An April 22, 2013, government attempt to unify the exchange rate set off a wave of hoarding of key foodstuffs by Iranians who are expecting the prices of those goods to rise sharply. The Iranian Central Bank acknowledged an inflation rate of 31% rate in April 2013, and a 45% rate in late July 2013. Many economists assert that these official figures understate the actual inflation rate substantially, and that is between 50% and 70%. Some assert that inflation has been fed by the policies of Ahmadinejad, particularly the substitution of subsidies with cash payments.
Click here for the full text.
 

Former US Hostages: Their Thoughts on New Iran Diplomacy

            The United States marks the 34th anniversary of the American Embassy seizure in Tehran on November 4— just four days before the resumption of diplomatic talks between Iran and the world’s six major powers in Geneva. The new talks, launched in October, have also featured the highest level engagement between the Islamic Republic and the United States since the embassy takeover, when 52 Americans were held for 444 days. Iran still marks the takeover with an annual commemoration in front of the former U.S. Embassy.

            The Iran Primer invited former hostages to comment on the new diplomatic effort, which is focused on ending the longstanding dispute over Iran’s controversial nuclear program. Their opinions varied widely. 
 
John Limbert, former political officer in 1979 and later the deputy assistant secretary of state for Iran in the Obama administration
 
     
      It's about time for new dialogue. Thirty-four years is long enough for us to be stuck on a road to nowhere. Now we are dealing with a delicate plant that will require very careful handling if it is not to rot or wither.
 
 
 
 
 
 
Bruce Laingen, former chargé d'affaires (senior U.S. diplomat taken hostage)
 
      Is it time for a dialogue with Iran?  The answer is easy: It is high time.  Talking with Iran is long overdue and should begin without conditions.
      It is obviously difficult for anyone who has not seen the specifics taken by the world’s six major powers and the Iranians, but both sides need clarity in their objectives . The absence of openness means that there must be some stepping back by both sides. 
 
 
      But given that the Iranians are the principal participant in the contest, the lead must come from them in greater transparency on long-range objectives.  Just what are the Iranian government’s real intentions in its nuclear agenda? It has long been lacking in clarity. The U.S. government needs to know better than we do now. Just where do the Iranians want to take their purposes and objectives? Tell us, please. We are weary of reading between the lines!   
 
Barry Rosen, former press attaché
 
      The apparent new dialogue, initiated by President [Hassan] Rouhani, is nothing but the change of the public face of the regime in Tehran in order to rid the country of the international sanctions that are crushing the economic and fiscal system of Iran. In order to accomplish the destruction of the sanctions, the regime is talking about a change in its nuclear program. Some hope that this is real and that Iran will show all its sites to the International Atomic Energy Agency and be a willing partner in lowering the or even halting the refinement of uranium, which Iran says is for peaceful nuclear energy.
 
      I believe that Iran's record is quite clear on nuclear refinement. The regime has consistently been enriching uranium at levels above what is need for nuclear energy, and thus one can only think that Iran is moving along in its plan to use its enrichment. Iran has used its facilities to add approximately 1,000 centrifuges to increase enrichment capacity.
     I can't see the regime in Tehran changing policy toward the United States for other reasons. The keystone of the Islamic Republic is still “Death to America,” no matter what is said in news reports. How will this regime be considered legitimate if it does a complete turn around and tries to build a relationship on maneuvering to destroy the sanctions without really moving itself away from its policy of a nuclear Iran. 
            Finally, the regime needs to address other issues besides human rights and support for terrorists groups like Hezbollah and the inhumane regime in Syria. From my personal perspective, Iran has never apologized for the takeover of the U.S. Embassy on November 4, 1979 and the 444 days of agony that our diplomats and military suffered and are still suffering today. Moreover, while all of this is going on, Iranians will gather at the former Embassy in Teheran to burn American flags and scream "Death to America" in five days from now.
 
William Daugherty, former third secretary (CIA case officer)
 
            As you may have already heard, Ahmadinejad was a wolf in wolf’s clothing; Rouhani is a sheep in wolf’s clothing. So before proceeding beyond the general discussion stage, there must be concrete evidence that [Supreme Leader Ayatollah Ali] Khamenei is fully behind not just discussions with the United States, but also achieving a permanent change in the relationship. That change must be composed of complete U.S. satisfaction with any agreements on the nuclear issues.  Moreover, there must be some substantial indication that Khamenei is capable of controlling the hardline factions that will oppose, perhaps violently, any agreement with the United States. 
 
      Without the two desiderata stated above, the United States should not proceed beyond a continuation of the dialogue, until and unless the Iranians come to an agreement that satisfies these two demands. 
      A significant component of the ability to manage the hardline opposition is evidence that the Revolutionary Guards leadership and higher echelons are either in accord with the agreement or that Khamenei is able to manage any dissent (or violence).  The Revolutionary Guards leadership have a huge personal stake in continuing the embargo because that is one source (through controlling and running the smuggling networks) of their not insignificant income. 
 
 
            In sum, I am fully supportive of a dialogue with the Iranians and reaching an agreement, provided that it includes the above. As an intelligence professional, I understand fully how difficult it is to obtain concrete proof of the willingness and ability of an opponent to change after nearly 34 years of blatant hostility, especially when that hostility includes terrorist actions that have killed nearly 300 Americans and wounded over 1,000 more (e.g., the Marine barracks in Beirut, the U.S. Embassy in Beirut, the Khobar Towers in Saudi Arabia, at least one aircraft hijacking in December of 1984).  Not to mention the taking of hostages (both in the embassy and in Beirut, through Hezbollah), the desecration of the U.S. Embassy in Tehran, and other acts of terrorism against our allies (e.g., Israel, through Iran’s support for Hamas and two deadly bombings in Argentina). But absent such proof, there should be no agreement. 
 
Cmdr. Donald Sharer, former naval air attaché
 
            I feel the U.S. government has let us down. If the United States is so intent on relations with Iran, we don't have a chance of recouping 14.5 months of our lives, let alone the pain, agony and not knowing when we would die at their hands. We have been forsaken by our country for 30 years on seeking retribution and once again we will be shut out.  Thirty-two years I served, just to be kicked aside for a blatant act of terror. People in Washington D.C. should have been there.
 
Col. Charles Scott, former naval air attaché
      In my view, Iran's current attempt at “peaches and cream” diplomacy is a clever ploy to stall, as long as possible, while continuing to develop a nuclear weapon and its delivery means. The goal of Islamic fundamentalism is to eventually dominate the world. Let's not be suckered in by this ploy. Forget the sweet talk and demand specific action.
 
 
Lt. Col. David Roeder, former deputy Air Force attaché
 
            One of the most memorable quotes from newly-elected President John F. Kennedy's 1961 inaugural address was, “Let us never negotiate out of fear, but let us never fear to negotiate.”
             Likewise, it was President Reagan who often repeated the old Russian proverb “doveryai no proveryia” (trust, but verify) especially when meeting with then-Soviet leader Mikhail Gorbachev.
            One cannot help but wonder if those historic principals may have been on the mind of Kennedy's fellow Bay Stater John Kerry on October 3rd during a press conference in Japan.
            Responding to a reporter's question about the potential thawing of relations between the U.S. and Iran, our new Secretary of State opined that it would be “diplomatic malpractice of the worst order” not to see if Iran was truly willing to recognize almost universal international demands concerning its nuclear ambitions.
            Almost immediately, the Obama Administration asked Congress to delay its scheduled consideration of a new and reportedly tougher Iran sanctions bill.
            All this, of course, stems from the recent meeting of the U.N. General Assembly where we saw several newsworthy developments: the start of newly-elected Iranian President Hassan Rouhani's so-called “charm offensive,” the closed door meeting between Kerry and Iranian Foreign Minister Mohammad [Javad] Zarif, President Obama's unprecedented “first blink” phone call to Rouhani after more than 30 years of public silence between the two nations and, finally, Israeli Prime Minister Benjamin Netanyahu's impassioned warning that Rouhani is but a “wolf in sheep's clothing” and that Iran has consistently proven that it can never be trusted.
            While most of the main stream media has quickly endorsed the view that President Rouhani is a genuine “moderate” with whom meaningful negotiations might be possible, in my opinion that view appears to be more wishful thinking than cold, hard reality. It is also interesting to note that, as Middle East scholar Hussein Banai explained, “In an Iranian context, a 'moderate' means you don't pick fights with the ruling class and at the same time, you pander to popular grievances people have about that ruling class.” Stepping back and looking at Rouhani's history is, therefore, a critically important and revealing exercise.
            First of all, and perhaps most importantly, we must never forget that to call Iran an Islamic republic is, at best, a misnomer. Iran is first, last and always a militant Shiite theocracy and the 64-year-old Rouhani, unlike his predecessor, Mahmoud Ahmadinejad, is a long-term, well-connected cleric within that environment.
            Second, under the Iranian political system, the elected President simply is not the power behind the former Shah's Peacock Throne and wouldn't have even been allowed to seek office unless he enjoyed the support of Supreme Leader Ayatollah Ali Khamenei and his Guardian Council.
            Thirdly, Rouhani has long served as the chief Iranian negotiator during numerous multinational and United Nations efforts to determine if the true Iranian dream is to become the Middle East's predominant nuclear power. While those negotiations have always purchased additional time for Iran's weapons research, they have otherwise gone absolutely nowhere!
            Whether or not Secretary Kerry's noble approach holds any promise for improved relations between Iran and the West, current U.S. foreign policy within the region - fragmented as it certainly is – places very little credibility on our side of the negotiating scale.
America is clearly in the process of reducing its presence in the Middle East as Kerry's and Secretary of Defense Chuck Hagle's visit to Japan and President Obama's planned, but now canceled, tour of the Asian Basin clearly indicates.
            Writing in the September issue of Commentary magazine, senior fellow for Middle Eastern studies at the Council on Foreign Relations Elliott Abrams wrote that “the administration's so-called 'pivot to Asia' is the supposed refocusing of American foreign policy away from the Middle East and onto the Far East.”
            Think about the potential consequences of that pull-out to our regional, but increasingly wary, allies. Even President Obama's own ambassador to Afghanistan, Ryan Crocker, recently commented “If it's a tactic, it is mindless; if it is a strategy, it is criminal.”
            Shortly before taking office in August, Rouhani was a principal participant in large anti-Israeli rally during which he described America's only democratic ally in the region as a “wound on the body of the Islamic world.” And finally, during his inaugural speech, Rouhani fully endorsed the Supreme Leader's ironclad position on Iran becoming a nuclear power.
            While he may be the epitome of an Iranian defined “moderate,” nothing has or is likely to change. Under most western definitions of the word, a “moderate”, Rouhani is not—not even close!
 
Sgt. Rodney (Rocky) Sickmann, former Marine guard
 
            These negotiations are frustrating. Frustrating that our government isn’t willing to hold Iran accountable for the inhumane, brutal and mental torture they put 52 Americans through for 444 days yet, in most recent negotiations regarding Iran’s nuclear program, they chose to negotiate even when Iran still offers no concessions. Iran has always depended on intimidation and terrorism to stay in power and during our 444 days in captivity Iran learned one thing: Terrorism on the United States works
      It is time. It’s time to start from the beginning on November 4, 1979 – the day we were taken hostage. That day dramatically reshaped the politics of the US and Iran and it’s time for Iran to be held accountable for their illegal actions and pay reparations consistent with the historical amounts established by the court.
 
 
 
            How can our nation ever make progress unless the US addresses the core issues within this terrorist country? We need to work within certain parameters to ensure the negotiations not only further the interests of the US, but also protect all Americans and our future generations. We need to demonstrate that the US will not tolerate the terrorism Iran began on November 4, 1979. We must hold them accountable and only then do then do I agree that negotiations towards a nuclear program solution would be successful.
 
*Titles and rank reflect positions during the 1979-1981 hostage crisis.
 

Photo credit: William Daugherty via Armstrong Atlantic State University

 

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What Billboards Say on Iran’s Foreign Policy

            Iranian suspicion about the United States has been splashed across billboards and spray-painted on public walls ever since the 1979 revolution. But anti-American art has actually now become a source of dispute within Iran’s government—and maybe a sign of changing times.
            Shortly after new diplomatic talks between Iran and six world powers, a new set of billboards challenging American honesty popped up across Tehran. They depicted an American envoy negotiating with an Iranian official, but under the table the American was clad in fatigues and cradled a shotgun pointed at the Iranian. The caption, in Farsi, read “American honesty.”
            Media supportive of new President Hassan Rouhani publicly blasted the series of billboards. They then just as abruptly disappeared from Tehran’s streets in late October.
 
 
            The local government claimed the billboards, reportedly put up by the Owj Cultural Organization, were unauthorized. “In an arbitrary move, without the knowledge or confirmation of the municipality, one of the cultural institutes installed advertising billboards,” said Tehran city spokesman Hadi Ayyazi. 
            But hardliners pledged to put them back up during the holy month of Ashura, which starts in mid-November. Hardline media charged the Rouhani government had pressured the city to remove them for fear of hurting Iran’s new diplomatic initiative. “With this ridiculous excuse, they put so much pressure on the city that they were forced to remove the posters,” Kayhan claimed in an editorial.
            Yet anti-American artwork is still a mainstay on official websites, most notably the new graphics still posted weekly on Supreme Leader Ayatollah Ali Khamenei’s Facebook and Twitter accounts. The most recent one, below, was posted on October 26.
 
           This poster (below) on Khamenei’s Facebook page refers to the 1953 coup led by the CIA and British intelligence against Iran’s first democratically elected government. The coup also restored the shah to the throne six days after he had fled to Rome. The Facebook posting includes a past quote by Khamenei:
            “The U.S. government, with the claim of democracy, has made so many crimes against democracies in the world. It’s about the regime that staged [the] 1953 coupin Iran and led the Chilean coup against the legitimate government ofthat country. Dozens of coups have been conducted in Latin America, Africa and other regions against national governments and for many years U.S. administrations have backed dictators such as "Reza Pahlavi" and even today if a dictator is not more ugly-tempered than they are… No one would believe [the] U.S. government’s claims fordemocracyand human rights."
 
            The theocracy clearly still fears American domination, a theme as central to the 1979 revolution as the campaign to oust the monarchy.
 
            Another posted on the supreme leader’s page marked the shooting down of an Iranian passenger flight by the USS Vincennes in 1988 on the 25th anniversary. The flight carried 290 passengers and crew; all fell to their deaths. The Reagan administration said it was an accident, but Iranians still note that the American captain was awarded a medal.
 

 
Photo credits:
Billboard photo from The Islamic Republic Designing House blog
Graphics via Khamenei.ir

Iran’s Environment: Greater Threat than Foreign Foes

David Michel

      Iran faces growing environmental challenges that are now more perilous to the country’s long-term stability than either foreign adversaries or domestic political struggles. More than two-thirds of the country’s land—up to 118 million hectares—is rapidly turning into desert, Iran’s Forest, Range and Watershed Management Organization reported in mid-2013. “The main problem that threatens us [and is] more dangerous than Israel, America or political fighting… is that the Iranian plateau is becoming uninhabitable,” presidential adviser Issa Kalantari warned in the newspaper Ghanoon. “If this situation is not reformed, in 30 years Iran will be a ghost town.” He described an alarming future of desiccated lakes and depleted groundwater, potentially driving millions of Iranians from their homes.
            Iran now ranks 114 of 132 countries evaluated on 22 environmental indicators, including water resources, air pollution, biodiversity and climate change, according to the 2012 Environmental Performance Index compiled by Yale and Columbia Universities.
 
Water
            Iran’s fresh water supplies are now under unsustainable strains. Ninety percent of the country—which is slightly smaller than Alaska—is arid or semi-arid, and an estimated two-thirds of its rainfall evaporates before it can replenish rivers. As a result, Iran provides more than half of its water needs by drawing from underground aquifers, but public usage is rapidly draining the subterranean reservoirs. At current rates of overuse, twelve of Iran’s thirty-one provinces will exhaust their groundwater reserves within the next 50 years.
            Iran’s economic policies have exacerbated the problem. Groundwater is free to well owners and, due to government subsidies, users pay a fraction of the actual energy costs for pumping water to the surface.  Iran annually pumps 4 billion cubic meters of groundwater that nature does not replenish. 
 
      Iran’s surface waters face similar pressures. Most of Iran’s rivers are hydrologically closed or nearly so, meaning their renewable water supply is already committed. So they have little spare capacity for regularly recurring dry years – when precipitation falls below the average – much less to meet the demands of a growing population. Water use upstream also increasingly impinges on water needs downstream. In the northwest, Iran’s dams (such as the Karun-3, left), irrigation systems, and drought have so diminished the 13 rivers feeding into Lake Urmia that the Middle East’s largest lake has shrunk more than 60 percent since 1995. In the southwest, Lake Bakhtegan, once Iran’s second largest lake, has dried up completely under the combined impacts of prolonged drought and damming on the Kor River.
 
Agriculture Imperiled
            Iran’s water problems now risk undermining the national economy. The agricultural sector produces 10 percent of Iran’s GDP and employs a quarter of the labor force. It also supports national food security, a top priority since the 1979 revolution was carried out in the name of “the oppressed.” Indeed, Tehran subsidizes producers and consumers alike in a dual strategy to promote self-sufficiency in staple crops by bolstering both supply and demand.
 
      Yet Iran’s food security is now imperiled because agriculture accounts for more than 92 percent of the country’s water use but only produces about 66 percent of the food supplies for 79 million people. Tehran has to import the rest. And the intensifying “water stress” threatens to further sap agricultural output, increase import bills and aggravate fiscal burdens. Agricultural demands are even subverting food security. Some areas, such as the central Kashan plain, have been rendered unfit for farming because of soil salinity, as groundwater overdrafts sink water tables.
 
Tough Choices
             Competition over scarce water has already fueled conflict both within Iran and with its neighbors.  In early 2013, farmers outside Isfahan destroyed a pump that diverted water from a local river to the city of Yazd some 185 miles away. Outraged at the loss of water, protestors refused to allow authorities to repair the pump, sparking  week-long demonstrations, armed clashes with police, and water shortages and rationing in Yazd.  In 2011, Iranian border guards exchanged fire with Afghan forces after crossing into Afghanistan to release water from an 18-mile irrigation canal from the Helmand River. And in the 1980s, the longest modern Middle East war was ignited by rival claims of control over the strategic Shatt-al Arab waterway between Iran and Iraq.
            The escalating pressures on Iran’s water resources raise difficult choices for competing consumers. In the Karkheh Basin, water managers have to decide what to do about lower river flows—whether to retain water in the Karkheh Dam to build reserves for hydropower or whether to release water downstream for irrigation to a region considered to be Iran’s food basket. 
 
Pollution
            Iran faces other serious environmental risks. According to the World Health Organization, Iran has three of the world’s five most polluted cities—Ahwaz, Kermanshah, and Sanandaj—that are choked by annual levels of air pollution that are ten to eighteen times higher than WHO’s maximum guidelines. Because of its poor air quality nationwide, Iran ranked 86 out of 91 countries surveyed. In Tehran (see below) alone, contaminants in air pollution cause more than 5,500 deaths each year from cardiovascular and respiratory diseases.
 
      Global climate change is also expected to worsen Iran’s environmental woes. Changes in temperature and precipitation will lessen access to clean water, especially in rural areas, in turn generating more water-borne diseases, according to Iran’s Department of Environment. Higher temperatures and lower rainfall could cut cereal yields up to 30 percent by 2050. Climate change could reduce Iran’s total renewable water resources 15 percent to 19 percent by 2040-2050, according to a Dutch analysis. Iran’s annual water demand would then exceed its renewable supplies by more than 40 percent.
 
The Toll
            The damage – from water stress, desertification and pollution--could impose debilitating burdens long-term. The annual cost of Iran’s environmental degradation already amounts to a whopping 5 percent to 10 percent of GDP, according to the World Bank.  In contrast, tough U.S. and international sanctions shrunk Iran’s GDP by some 1.4 percent in 2012, according to the U.S. Government Accountability Office. Over time, valuable resources will be further depleted, productivity diminished, and public health damaged. 
            Mismanagement has contributed to Iran’s environmental problems.  Its cities lose one-third of their water supplies in leaky pipes. Irrigation is also highly inefficient; more than half of Iran’s renewable water used in agriculture is lost. Surmounting Iran’s environmental challenges will require serious reorientation of policies and resources. The cost of new technologies, conservation practices and other measures to meet projected water needs in 2050 could top $3 billion a year, experts say.
            Iran has recently taken important steps in the right direction. Subsidy reforms initiated in 2010 will gradually require consumers to absorb the actual costs of water supplies, enhancing the incentives to be efficient. Revenues saved from cutting back energy subsidies are intended to support initiatives to reduce greenhouse gas emissions and air pollution. But the subsidy reforms stalled after phase one. They were also not designed or intended to deal with environmental challenges.  Iran’s looming environmental crisis will require a comprehensive green revolution in national policy-making.
 
David Michel is director of the Environmental Security Program at the Stimson Center, a non-partisan think tank in Washington D.C.
 
Online news media are welcome to republish original blog postings from this website in full, with a citation and link back to The Iran Primer website (www.iranprimer.com) as the original source. Any edits must be authorized by the author. Permission to reprint excerpts from The Iran Primer book should be directed to permissions@usip.org
 
Photo credits:
Maranjab desert in Iran by by Siamaksabet (Own work) [CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons
Karun-3 dam by Zereshk via [CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons
Fieds in Eghlid county by Alireza Javaheri (Iran - Fars - Eghlid - Timargun (Namdan)) [CC-BY-3.0 (http://creativecommons.org/licenses/by/3.0)], via Wikimedia Commons

Tehran Pollution by Matthias Blume [CC-BY-SA-2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons

Kerry on Iran Nuclear Talks

            On October 28, Secretary of State John Kerry said not testing Iran’s intentions to solve the nuclear dispute would be the “height of irresponsibility and dangerous.” Kerry emphasized that whatever actions Iran would take as part of a settlement must be verifiable. He also reiterated that “no deal is better than a bad deal” that would leave Iran with potentially dangerous nuclear capabilities. Iran is scheduled to meet with the world's six major powers on November 7 in Geneva. The following are excerpted remarks from the Ploughshares Fund gala.

      Obviously, we are now facing a test of that – two tests – in North Korea and in Iran. And we are engaged, as the President has charged me to be and has welcomed, an opportunity to try to put to test whether or not Iran really desires to pursue only a peaceful program, and will submit to the standards of the international community in the effort to prove that to the world. Some have suggested that somehow there’s something wrong with even putting that to the test. I suggest that the idea that the United States of America is a responsible nation to all of humankind would not explore that possibility would be the height of irresponsibility and dangerous in itself, and we will not succumb to those fear tactics and forces that suggest otherwise.
            Nor will be stampeded into some notion that this is easy, or that somehow just the mere statement you’re willing to do something means you have done it. Our eyes are wide open. The actions must be real. They must be fully verifiable. They must get the job done. And no words can replace those actions. And we have made it crystal clear, and I will repeat again, no deal is better than a bad deal, because a bad deal could actually wind up creating greater danger.
            So we will do what is necessary here, but it is important for everybody to remember that in a world with fewer nuclear weapons, every nation can actually be stronger, not weaker. Everybody can actually be safer and more secure because of the regimen that you set up in order to guarantee that. These are principles that guide us as we work to keep these weapons out of the hands of terrorists who seek to buy a nuclear bomb or get one off the black market, people who are nihilists with little interest in diplomacy, with no economy to sanction, no desire to join the international community, no concern for the next generation growing up on this earth.
            The principles that guide us are the same principles as we work with our international partners to eliminate Syria’s chemical weapons that Michael talked about a few minutes ago. Who would have imagined a few months ago that we would be removing weapons that hadn’t even been acknowledged to exist? We have to seize these opportunities. We have to explore this in the name of humankind and in keeping with our responsibilities as stewards of this planet.
 

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